Market Overview: Measured Recovery Amid Shifting Conditions

Pearl Nyakunengwa Data Analyst - EMEA Syndicated Loans Data, Bloomberg LP

Venty Mulani Data Specialist – EMEA Sustainable Fixed Income, Bloomberg LP

The sustainable debt market entered Q3 2025 with cautious resilience, posting a modest 4% quarter-on-quarter decline in issuance.

While activity remains below the peaks recorded in 2023, sentiment continues to strengthen as borrowers navigate a more stable rate environment and adjust to evolving disclosure and regulatory expectations. Green Loans retained their position as the dominant instrument, underscoring sustained demand for structures with transparent, project-linked use-of-proceeds frameworks. Sustainability-Linked Loans (SLLs) followed, though issuance was driven primarily by seasoned borrowers recalibrating KPIs and verification standards. The shift reflects a broader market preference for credibility, measurability, and improved alignment between financing terms and sustainability performance.

Source: Bloomberg

EUR issuance retained its dominance in Q3, reflecting the resilience of the European market and ongoing alignment with CSRD and ESRS disclosure frameworks. The relative strength of EMEA’s regulatory momentum continues to attract borrowers and investors seeking clarity in ESG reporting standards.

Source: Bloomberg

Sector Trends: Strong Divergence as Energy Leads Q3 Momentum

Sector activity in Q3 2025 highlighted sharp divergences across sustainable lending. Energy led, with volumes more than doubling year-on-year as transition and infrastructure financing accelerated, while Utilities saw a moderate decline but remained a core contributor. Industrials recorded solid growth, supported by efficiency and transition-focused borrowing, whereas Financials contracted significantly amid softer refinancing appetite. The steepest declines came from Communications and Technology, both normalising after outsized 2024 deals and facing longer regulatory timelines.

Source: Bloomberg

Regional Dynamics

EMEA maintained its position as the global anchor for ESG lending, accounting for the majority of new issuances, with notable strength in sustainability-linked refinancings.

North America displayed a cautious uptick, led primarily by Green Loans, while issuance in SLLs remained constrained by regulatory and political uncertainty.

APAC continued to expand steadily, supported by regional policy incentives in Japan and Australia that encouraged corporates to adopt sustainable lending structures.

Source: Bloomberg